Types of customers who regularly attend the center

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The Bellini Center has scheduled two operas this season: Mozart's Cosi Fan Tutte, and Wagner's Tristan und Isolde. It has estimated that there are four types of customers who regularly attend the center (there is an equal number of individuals of each type), with different willingness to pay for operas from the Classical (Mozart) and the Romantic (Wagner) period. Customer A's reservation price for Mozart is $85 and for Wagner is $15; customer B's reservation price for Mozart is $60 and for Wagner is $60; customer C's reservation price for Mozart is $50 and for Wagner is $70; and customer D's reservation price for Mozart is $10 and for Wagner is $90. Suppose (for simplicity) that the marginal cost of a seat is zero. The Bellini Center is considering the following alternatives: (A) sell the tickets for the two operas only as a bundle; (B) sell them separately; (C) offer them as a bundle and also price them separately. Then

Pure bundling with a price for the bundle equal to $100 maximizes profits.

Pricing the two operas separately at $50 for Mozart and $60 for Wagner maximizes profits.

Mixed bundling yields strictly higher profits than (A) and (B).

Mixed bundling yields strictly higher profits than (B) but not (A)

Reference no: EM131092418

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